Bellway hopeful as housing interest picks up

Housebuilder Bellway highlighted signs of life in the property market today after an improvement in activity so far this year.

Looking forward: Bellway has its year end target in sight

The Newcastle-based group said visitor numbers and reservation rates were up in the first 11 weeks of 2009 compared with the final five months of last year.

But Bellway cautioned it had yet to see any 'consistent and prolonged' improvement in consumer confidence.

Interim figures from the group revealed average property prices slumped 11% to £156,100 in the six months to January 31, while it sold 2,014 homes against more than 3,250 a year ago.

Bellway plunged into the red with half-year pre-tax losses of £48.6m compared with a £96.9m profit a year earlier after taking writedowns in the value of its land of £66.3m.

An increase in buyer interest helped to slow the decline in reservations to 13%, 'generating optimism that our current year end target is achievable,' according to the group.

Its order book had sunk to £296m at the end of January - almost half the level seen 12 months earlier.

Bellway said the north of England had been more badly affected by the housing downturn, with a 59% dive in the number of sale completions over the six-month period.

The south saw a 'relatively modest' 14% decline to 1,286 homes, it added.

But prices overall have fallen by a quarter since the peak in August 2007, with falls of anything up to 40% in some locations, said Bellway.

Sale cancellations are also running at historically high levels of around 26%. It has been luring buyers with incentives, such as shared equity and part-exchange - used in 'virtually every' private reservation.

However, shares rose 4% today as the market cheered news of an improvement in reservations and as it confirmed it was ahead of its planned debt reduction programme.

Net debt was trimmed by almost £40m in the half-year, to £178.8m and Bellway continues to 'operate comfortably' within its banking covenants - a key concern for housebuilders, given the slide in property and land values.